Grexit - Andrew Balls on Greece and the Euro
Following on from Ben Christopher’s article, a BBC Radio 4 interview with Andrew Balls, an investment fund manager, and younger brother of The Shadow Chancellor on the possibility of a Grexit - Greek exit from the Euro.
read more...»Unit 4 Macro: The Euro Zone Crisis (Revision)
Here is a revision blog on some of the key economic challenges facing the seventeen member nations of the Euro Zone or Euro Area
read more...»Eurozone macroeconomics for 9 year olds - brick by brick
It’s time to start treating our A2 economics students like 9 year-olds…in a kind-hearted way. How? With this highly creative and engaging piece of analysis by the market analysts at JP Morgan.
The Eurozone crisis is both political AND economic, with the underlying issue one of who pays the bill for nation and bank bailouts. The political impasse in Europe over the crisis is difficult to understand. But this Lego-inspired graphic does a pretty good job of explaining who wants what. Follow the commentary underneath the graphic to hear the story.
Hand it out to your A2 students and see if they can make sense of it.
EU Enlargement - Evaluating the Impact
Many of Europe’s newer member states have outperformed established EU countries since they joined the single market in 2004 and 2007. And as a result there has been a process of convergence in average living standards and improved employment opportunities. Europe’s new nations have injected extra dynamism into the region despite inevitable teething problems along the way.
For students revising aspects of EU enlargement here is a streamed version of a presentation I gave to a Tutor2u event in London a few weeks ago
A streamed version of the presentation is available here
PDF Handout of the presentation
Related news issues
Germany expects influx of Polish workers (BBC news, April 2011)
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Focus on Ireland’s Economy
Ireland is an economy suffering an economic, financial and political crisis. Her freedom to operate an independent macroeconomic policy is constrained by her membership of the single European currency and there are many who doubt that Ireland will be able to achieve a sustained recovery without some form of debt default. Our charts below track some of the key macroeconomic indicators for the Irish economy and below them we have gathered together recent blogs on Irish economic issues.
read more...»Tracking the effects of the recession on GDP
An excellent resource for Unit 2 and Unit 4 macroeconomics. Vishnu Padmanabhan from Timetric has this excellent look at the impact of the recession on real GDP growth in OECD countries. Which countries did best and worst in the recession? It turns out that Australia, Poland, Israel and South Korea were the countries least affected by the crisis and all avoided a full-blown recession - experiencing instead a soft landing. Here is Vishnu’s article. Our own growing selection of Timetric charts can be found by scrolling down to the bottom of this blog entry.
The OECD has just produced their annual review of Going for Growth - a largely supply-side look at policies designed to promote long-term growth in productive potential in the world economy. Details can be found here.
AS Macro Key Term: Relative deflation
The term “relative deflation” is generally used to describe an economy with an inflation rate, which has not necessarily descended into negative territory, but is markedly lower than comparable economies. Over time, a low relative rate of inflation can lead to an improvement in price competitiveness in international markets, assuming that there has not been a compensating change in the exchange rate between two countries.
In our data example shown below we track consumer price inflation in Ireland, Spain and Germany. For most of the period shown, the annual rate of inflation in Germany was substantially lower than two of her partners in the European single currency area - this is an example of relative deflation.
read more...»Timetric: Unemployment Rates for Selected Countries
In this Timetric chart blog we look at unemployment rates for a selection of country groups - these automatically updated charts will track what is happening to the standardised jobless rates for clusters of countries starting with one that includes the Euro Area, Germany, USA, UK and Japan. The second chart is the unemployment rates in the so-called PIIGS - Portugal, Italy, Ireland, Greece and Spain
read more...»Ireland - Mass Unemployment and Shrinking GDP
We know that Ireland is in deep economic and financial trouble. Our Timetric chart will keep pace with what is happening to Irish real national output and their unemployment rate (measured as a % of their labour force). And in the links below you can connect to recent blog posts on Ireland - one of the countries inside the Euro Zone that faces a huge sovereign debt crisis that may take years to resolve.
Here is the chart
read more...»Economics Q&A: Why might Europe’s weaker economies struggle to grow in the next few years?
A starting point to this question is to discuss what “weaker EU countries” might mean. We can use some of the conventional indicators of macro performance to help us namely:
1. Slow or negative economic growth
2. Rising unemployment and falling employment rates
3. Deteriorating public sector finances and higher government debt
4. Relatively high inflation or perhaps an economy experiencing a period of deflation
5. A high deficit in trade in goods and services
Other indicators might be used to identify weaknesses in performance - for example:
1. Relatively low labour productivity
2. A falling share of global trade
3. Rising yields on long term government bond issues
4. Weaknesses in non-price competitiveness
EU Economics: EU Economy in Charts Jan 2011
Here is an updated twenty five slide streamed presentation on macroeconomic developments in the 27 countries of the EU with a particular focus on the Euro Area and UK/EU comparisons.
read more...»Using Google Docs - The Irish Financial Crisis
My Year 13 students have worked on a collaborative piece this week on the Irish financial and economic crisis. We considered the background to the crisis, why the UK is helping with the bail out and some of the consequences for the future stability of the Euro. The final version of the Google Doc is available to download here.
read more...»iLand - Shareholders and Taxpayers feel the Pain
On a scale of 1 to Ireland, how broke are you? In February 2007 The Bank of Ireland had a market capitalisation of over sixty billion euro. Market cap is the market value of a company’s issued share capital, i.e. the number of shares multiplied by the current price of those shares on the stock market. Today that market cap has collapsed - and as of this morning - With a market cap of $1.4bln, the bookmaker Paddy Power is now Ireland’s largest financial stock!
Another perspective: Facebook’s latest stock market valuation is €105bn. Ireland’s annual GNP: €130bn.
And low-cost airline Ryanair’s market cap tonight is nearly three times that of the entire Irish banking system!
The destruction of shareholder value in the Irish banking system is immense - but the losses and debts of the banks have been socialised and are being borne by Irish taxpayers. The emergency budget will hit people tremendously hard - among the announcements:
* €200 per household property tax for Ireland
* VAT will rise twice to 23%
* A cut in the national minimum wage in Ireland - cut by one euro to 7.65 euros per hour
* Pay cuts in the private sector
* The introduction of domestic water charges by 2014.
Rumours that Steve Jobs is set to use some of Apple’s cash pile to purchase the country and re-brand it iLand appear to be a little wide of the mark!
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Why is the UK helping Ireland?
This was a question posed this morning by one of my year 12 students and led to an interesting class discussion as to whether we should indeed be lending the Irish £7 billion. I’ve now found a BBC news video which will illuminate this topic further…
read more...»Irish economy sinks deeper into recession
The latest growth figures for the ailing Irish economy make for sorry reading. National output continues to shrink and this is reducing the size of the tax base from which the government draws revenue to pay off the huge level of debt. This BBC news video provides a background on the debt-recession spiral.
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A2 Macro - Economic Growth Charts
We started our teaching this year by looking at issues related to measuring living standards and now we are moving onto aspects of the causes and consequences of economic growth.
I like to put growth into some kind of context by drawing on recent UK cyclical data and growth information for a range of other countries. I have attached a brief powerpoint of such charts with this blog which may be of some use for colleagues.
One of the interesting trends for many OECD countries is that estimated trend growth (the % change in potentail) GDP has fallen sharply in recent years. Indeed for Spain and Ireland, trend growth estimates have dropped into negative territory. Mo’s recent blog on hysteresis links in part to why this is happening.
Download the A2 Macro Growth Charts
Economic_Growth_Charts.pptx
Ireland’s GNP and the Debt Crisis
Despite well publicised attempts to tackle an alarmingly high fiscal deficit, Ireland still has a budget shortfall in excess of ten per cent of national income and a high accumulated national debt measured as a percentage of GDP. But the true situation may be much worse. Low corporate taxes encouraged sizeable inflows of FDI especially from North America, the result being that Ireland’s GDP is much larger than her GNP - a better measure of the national income generated by Irish-owned economic assets. Government borrowing measured against GNP is very large indeed. And Ireland along with countries such as Greece, Portugal and Spain is mired in the classic debt-growth trap - how can it achieve fiscal austerity when national output and real incomes are falling.
Simon Johnson is strong on this issue today - the dangers of sovereign debt
“Debt overhangs hurt growth for many reasons: business is nervous that taxes will go up in the near future, the cost of credit is high throughout society, and social turmoil looms because continued austere policies are needed to reduce the debt.”
Irish Deflation
Deflation has been an issue for the Irish economy over the past 18 months. Given its strong position as one of the European PIIGS, rising unemployment and weak financial system, deflation is just another economic problem among many!
read more...»Lessons for the UK from the Irish Recession
Stephanie Flanders offers this timely and well-judged piece from the Irish Republic about how the former celtic-tiger ecoonmy has adjusted to the painful medicine of fiscal austerity after their deep economic recession. She asks what lessons there might be for the political parties fighting the UK election.
